Blacksquare Capital’s diversified absolute return fund is recovering lost ground following a difficult period last year which started with the extreme market volatility in August.
The fund was up by 2.32 per cent last month, building on gains made in January, bringing year-to-date returns up to around 4.84 per cent.
The firm says nine of its 10 underlying managers produced positive returns last month, helped by the recovery in risk assets such as equities.
It says the portfolio is generating the type of returns expected in this type of environment and that it suffered losses after the market turbulence last August because it had too much exposure to risk assets and did not reduce risk quickly enough.
The fund lost 7.94 per cent in August followed by a 4.05 per cent loss in September. It gained 1.38 per cent in October but fell by 2.66 per cent in November and lost 1 per cent in December.
Blacksquare says it is pleased with the fund’s more recent performance and points out that because of the way it is built, with each underlying fund having low correlation to the other holdings, there should never be a month when all the underlying managers generate positive returns.
Chief executive Christopher Peel says: “The managers we look at may tread the same markets but the correlation of returns is low. That is how fund of fund managers can add value.”